Skype 2.0 Beta in The Air

Now you can smile big and get noticed when placing calls on the Skype phone.

Free voice-over-Internet (VoIP) provider Skype is joining the pack with a videophone offering to compete with the likes of AOL Instant Messenger (AIM) and Microsoft's MSN Messenger.

A public beta of Skype 2.0 was released Thursday morning with a full-screen video VoIP feature, as well as other bells and whistles, such as being able to group your contacts, customize mood settings, a new user interface and one-click calling to Microsoft Outlook contacts through a toolbar.

"At Skype we want to make talking over the Internet the most natural, simple thing for people all over the world to do," Niklas Zennstrvm, Skype CEO, said in a statement. "With the release of our new software, it's never been easier for people to talk to one another for free, and now they can see each other with video, as well."

The Internet phone update also includes the ability to show availability and start up a Skype phone call from a blog or personal Web site.

Skype officials also announced today a licensing deal with On2 Technologies to use its video compression technology for the video service provided in the beta. The company has licensed the use of current and future versions of On2's TrueMotion video codec.

The Luxembourg-based provider was hoping to get the beta out in August, but the delay gave AOL an opportunity to steal some thunder in the video VoIP arena.

AOL launched its AIM update last month, Triton, which features a video option for its TotalTalk VoIP that, like Skype, allows for calls to both PCs and mobile and landline phones.

Company officials wouldn't comment on when Skype 2.0 would come out of beta as a finalized product, saying the release date is dependent on the feedback it receives and completing the update as a consumer-ready product.

The latest offering is another sign Skype is ready to capitalize on its VoIP leadership and compete with two of the largest public instant messaging (IM) networks on the planet. While much of Skype's focus is on VoIP, the company also offers robust IM chat features such as conferencing and file sharing.

Skype got a significant boost in both legitimacy and financing when it was announced in September that auction giant eBay was purchasing the company for $2.6 billion.

It's unlikely the company needed the legitimacy boost. Skype already had a massive user base before the eBay announcement with 54 million members and an average rate of 150,000 new users a day.

The company also announced has partnered with Logitech to jointly market Skype-certified webcams and is also working with Creative.